Transfer procedures in the lease of commercial properties

In commercial property, the delivery of premises is a critical time to take note of important issues and matters that require attention. Later, these notes can help the tenant or landlord in any matter of debate or dispute. There is a handover and the beginning of the occupation and again at the end of the occupation.

In all respects, the tenant’s occupancy and delivery of the premises must be in accordance with the lease. This says that you, as a property or leasing manager, should read the lease and understand it. Even on a single property with many different tenants, the leases can and usually are different. The “performance” clauses and “transfer provisions” of the lease are unique and must be understood in relation to each lease.

The taking of photographs is also part of the documentation of the facilities at the time of delivery. It is recommended that the photos taken have the date and time stamp in the camera, and that the photos are subsequently saved as ‘gif’ files and not as ‘jpg’. This is because ‘gif’ files are a more stable and fixed format that cannot be manipulated with software editing tools like ‘Photoshop’. If you want the photograph to be evidence of something important, then the ‘gif’ format is a reliable option.

While each lease is unique, let’s set a few rules to give you some benchmarks to work with at the time of transfer. Then you can add some other matters that may be applicable to the location or property where you work.

  1. Take photos in ‘gif’ format as evidence of important things and levels of presentation
  2. When taking pictures, it is worth putting a scale reference, like a ruler, on the image.
  3. Make notes of any comments or agreements from either party to the lease.
  4. Check all painted walls and surfaces for damage or current condition, taking photographs as appropriate to record the current condition.
  5. Check roof panels and T-bars for roof presentation and integrity.
  6. Look over the ceilings for the satisfactory removal of any unnecessary wiring that should have been removed
  7. Check all floor coverings for damage or deterioration beyond normal ‘wear and tear’
  8. Look for any floor or wall penetrations that exist or need to be repaired, keeping in mind that any penetrations must be fire rated per local building code standards.
  9. Check the operation of the air conditioner and observe any need for balance of the air conditioner due to conditioning or partitions altered or installed in the leased space.
  10. Check lights and light switches for operation and safety. It may be necessary to replace all tubes in light fixtures as part of the provisions of the lease.
  11. Check all doors and locks for safety and security. Don’t overlook the need for doors and locks to meet all building codes. All door keys must be surrendered or returned as appropriate. If a master key system is installed in the building, verify that all keys comply with the master system
  12. Check the windows to see their function, safety and protection.
  13. Check the electricity supply to the tenant and any measurements of the energy consumed.
  14. Verify the installation and compliance of any local signage and that it is in accordance with the architectural rules established for the building.
  15. Look for any changes in the structural integrity of the building and facilities.
  16. As part of the verification process, it is sometimes desirable for homeowners’ contractors to inspect the premises and provide a full report of any complex or sensitive issues. This will support any subsequent legal disputes about the good terms and conditions.

When keys are exchanged between tenant and landlord, or landlord and tenant, a receipt must be obtained as a record of the handover of the keys. The actions of real estate agents in the assignment to any tenant must also be supported by notes. It’s amazing how many disputes come up later when you least expect it; in such a case, your notes are invaluable.

Never return any bail money or bank guarantees to tenants until you are absolutely sure that all the requirements of the lease have been met. It is also noteworthy that all repairs must have been made prior to the expiration of the lease; it is not something that is done after the lease expires.

Efficient relocation and repair procedures are a critical skill that the real estate agent must develop and implement in every leasing situation.